S&P Global Ratings’ Luisina Berberian is interviewed by Energetica India on why offshore wind projects are taking off globally
Offshore wind projects are taking off as technology improves and costs fall. For example, in the UK, where offshore wind power generation is highly advanced, the cost of energy from offshore wind has fallen by 32% in the past five years. However, there is vast untapped potential elsewhere. With more than 4,200GW of offshore wind energy technical potential in the U.S. alone, the North American offshore wind industry is still relatively nascent.
Luisina Berberian, Associate Director, Infrastructure Finance Ratings Group, S&P Global Ratings, talks to Energetica India, about the ongoing boom in offshore wind projects globally. She also considers what kinds of challenges still exist for these projects, and where S&P believes the global wind offshore industry may move over the next 5-10 years.
To read the full piece, please click here and scroll to pages 46-47.
Three Gorges Finance II received a score of E1/83 on S&P Global Ratings’ new Green Evaluation scale for its €650 million green bond issuance due in June 2024. This is the first ever Chinese green bond to be ranked under the Green Evaluation framework. The bonds will be used to finance European wind power projects in Portugal and Germany – totalling 710 MW of installed capacity – which have been acquired by China Three Gorges Corp., the largest hydropower enterprise in the world.
The transaction received an overall score of 83, which equates to E1, the highest level in the scoring range of E1-E4 for mitigation proceeds. This high overall score reflects robust scores in both Governance (73) and Transparency (67) and an excellent Mitigation score (91). The proceeds will be allocated to wind power projects in Portugal and Germany. The Portuguese assets consist of 12 onshore wind projects in five regions across the country. The German asset is an offshore wind project in the North Sea, known as WindMW GmbH or Meerwind. This issuance is in line with China Three Gorges Corp.’s corporate strategy, under which it has acquired and plans to continue acquiring assets, both in China and further afield, to grow and diversity its renewable energy business.
Following distribution by Moorgate, the Green Evaluation was covered by Environmental Finance.
Global investment in offshore wind projects is soaring – propelled by rising investment in renewables, lower market costs, greater climate change awareness worldwide, and developments in technology. With Europe still standing tall as the regional world leader in offshore wind power, other regions are fast recognising the benefits.
While these regions try to emulate the technological breakthroughs seen in Europe, there remains a plethora of market challenges that must be addressed.
Writing for Energy Voice, Luisina Berberian, associate director, Infrastructure Finance Ratings, S&P Global Ratings, considers the technological, regulatory, and geographical limitations to offshore wind power growth, and how the industry as a whole will overcome them.
To read the full article, please click here.
In Europe, investment in the offshore wind industry has grown at an annual average rate of 30% in the past five years. Elsewhere – such as in the Americas and China – the industry is striving to follow Europe’s lead. But first these regions must overcome a raft of barriers, namely technological concerns, regulatory issues, and geographic limitations.
S&P Global Ratings’ report, “Offshore Wind Projects Take Off As Technology Improves And Costs Fall”, explores the factors driving offshore wind projects, the challenges these developments face, and where the next, untapped opportunities for offshore wind power lie.
Following outreach by Moorgate, the report was covered by the specialist press, including: E&E News, FD.BKX.COM.CN (article published in Mandarin), Windpower, Engineering and Development, BNAmericas, Energy News and Business Green.
The Argentine energy sector faces a predicament. During peak seasons, the country’s inefficient electricity generators are unable to satisfy growing power demand – at best obliging the country to import electricity and at worst leaving some areas in the dark. In response, the Argentine government hopes to attract US$15 billion of investment (most likely from the capital markets) in an effort to modernise its grid – setting a 20% renewable energy mix target for 2025.
A report published by S&P Global Ratings, however, opines that the plans to boost the Argentine grid with more wind and solar energy sources may face difficulties. Investors may have already been dissuaded from renewables as a consequence of the country’s default history and low wholesale electricity prices. But eclipsing these concerns is the unpredictable regulatory framework that oversees the country’s renewables investments.
For Argentina to continually attract investors, a more investor-friendly regulatory framework could form part of the solution. This includes providing guarantees to investors that power purchase agreement terms are honoured – including timely invoice payments. Without rapid action, S&P Global Ratings believes investors’ risk-return calculations may begin to swing out of the country’s favour.
The report was covered by specialist press outlets, including Power Engineering International, Power Finance and Risk, Energy Live News, and RENews.
Photo credit CC search user: Global Panorama. (License).
The last five years has seen significant growth in climate-related infrastructure financing, but the election of Donald Trump raises new questions to that expansion. In the first of a new series of articles for InfraNews, S&P Global Ratings’ Head of Environmental and Climate Risk Research, Michael Wilkins, explains how, despite obstacles, environmentally-friendly infrastructure investment can continue to evolve.
Although global climate finance flows have increased by almost 15% since 2011-2012, a potential shift in the environmental agenda from the world’s largest project finance debt issuer, the US, certainly raises fears for progression. The Clean Power Plan (CPP) – introduced in 2015 with the aim of reducing carbon emissions from US-based power plants — is the primary energy infrastructure policy under threat. Should the plan pass, it would greatly benefit renewable investment and an unprofitable nuclear fleet – which remains a competitor to carbon-emitting coal and gas. However, the CPP remains unimplemented as it awaits Supreme Court review, the outcome of which will be influenced by Trump’s appointment of Supreme Court Justice.
Despite Trump, many US states will continue to have an appetite for building renewable energy infrastructure, for which much of the financing is expected to come from green bonds (bonds whose proceeds must be for sustainable use). As green energy build continues, investors will look for a more standardised method of reporting and certifying bonds’ “greenness” – one that accurately evaluates the environmental impact of projects over time. For this reason, S&P Global Ratings has developed an assessment which rates green bond governance, and the environmental benefits to be derived.
Read the article (with a subscription) at InfraNews.
S&P Global Ratings has assigned its ‘A+’ issue rating and ‘1+’ recovery rating to MidAmerican Energy Co.’s (MEC) – a subsidiary of Warren’s Buffett’s Berkshire Hathaway – first “eligible green” bonds.
MEC’s first mortgage bond issues, worth $375 million (due 2027) and $475 million (due 2047) respectively, will replenish the utility’s general funds that were used to begin construction on two wind farm projects in Iowa – the 551-megawatt Wind X and 2,000 megawatt Wind XI. The rating reflects the likelihood of full recovery of principal given the bonds have collateral with ample coverage.
When Wind XI, the largest single economic development project ever in Iowa, is completed later this year, MEC will be generating enough electricity with renewable resources to satisfy approximately 85% of the state’s retail customer demand.
As a result of Moorgate’s media campaign, the rating gained coverage with the infrastructure and institutional investor press, including Environmental Finance, FTSE Global Markets, and Global Capital (subscription required).
Image credit (without changes): Blatant Views
In an article for Energy Storage Journal –a quarterly journal dedicated to energy storage and smart market grids – Michael Wilkins, managing director of infrastructure finance ratings and head of environmental research at S&P Global, highlights the importance of risk assessment in making energy storage infrastructure commercially viable.
In the article, Wilkins highlights the incremental use of renewable sources in global energy systems. However, he notes that without energy storage systems – to compensate for fluctuation in supply of natural resources – renewables are unlikely to account for a majority share of a country’s power generation mix, and certainly unable to meet the global goal of being free of fossil-fuels by the end of this century.
Although in decline, the costs associated with energy storage technology are still relatively high and, therefore, storage projects require significant financing. But to become commercially viable the associated project risks – including those concerned with construction, operations, availability of resources, the market and the technology – need to be identified and assessed in order to increase transparency, mitigate impact and therefore ‘crowd-in’ investment.
Please read the full article online here.
With 261 renewable energy projects currently in the pipeline, Chile offers renewable energy companies a market teeming with potential. In a recent article for Renewable Energy World, Santander’s Latin America Desk Head, Mauricio Munguia, discusses the opportunities presented by the market, for both private-sector initiatives and export.
Indeed, with an ambitious aim to generate 70% of its electricity via renewable sources by 2050 – and world-class wind, solar, hydro, geothermal, wave and tidal resources – Chile is considered by many to be one of the world’s top renewable energy markets. Furthermore, it has restructured its energy supply auctions, and established a tax on carbon emissions, in an effort to mitigate the barriers to entry for non-conventional sources.
To read the full article, please click here.
In an exclusive article for Energy World – the monthly journal of the Energy Institute – Michael Wilkins, managing director of infrastructure finance ratings and head of environmental research at S&P Global, sets out the importance of the UK’s ‘Contracts for Difference’ (CfD) feed-in tariff scheme for reforming the country’s electricity market to include a greater percentage of renewably sourced energy.
In the article, Wilkins explains that by setting a ‘strike price’, whereby the government compensates for market price declines, CfDs guarantee stable revenues for renewable energy generators, thus attracting further investment.
Despite the clear benefits, not all projects will qualify for the government’s scheme. Much debate over whether to include the already mature onshore wind market, for example, is still underway. Wilkins argues that until the right steps are taken to offer developers clear policy, CfDs will not be able to live up to their full potential.
Read the article online here (please note: the magazine requires a subscription).